How Do I Avoid Paying Interest on Student Loans?

Our editor-in-chief 'makes cents' of paying less student loan interest

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Dear Kristin,

How can I avoid interest on student loans? I want to start making payments on my unsubsidized student loans, but I think I'll still end up paying a lot of interest for my bachelor's and master's degrees.



Dear Rachelle,

If only we could take out a loan and avoid paying interest!

Unfortunately, interest is how the lender makes money, so there really is no way to avoid paying interest on your student loan completely. I’m not sure when you took out your loan, but with student loan interest rates from the government as high as 6.54% for unsubsidized loans, it makes sense that you want to avoid paying it altogether. But while there is no secret or hack that gets you out of paying interest, you can reduce the total amount of interest that you do end up paying on your student loans.

The easiest (and fastest) way to avoid paying a lot of interest is to pay off the loan completely. This way, you avoid the interest rate payment month after month. And according to some estimates, the average borrower takes 20 years to repay their student loans. Over time, that adds up to a lot of money you’ll end up paying in interest. This strategy of eliminating your student loan debt is great if you have the money to pay off your loans, and if the interest on your loans is higher than the interest you could earn by saving or investing it.

You say you haven’t started paying off the loan yet, and with markets in a tailspin, there’s a good chance the interest rate on your loan is higher than any gains you’d make investing your money. So you’re better off eliminating high interest debt than using any extra money you have chasing after returns on the stock market.

You might not have the money right now to pay off your loan in full, but you can still reduce the amount of interest you pay by finding ways to pay off your student loans faster

You can take months—or even years—off the length of your loan by adding a few extra dollars each month to your student loan payment. Can you spare an extra $10, $50, or even $100 extra a month? If so, you can start to make a big dent in the size of your loan. If you want to be even more aggressive, you can add one extra full payment every year, paying 13 payments in a year instead of 12. If you have the funds, you can even decide to pay twice a month instead of once. 

Whichever method you choose, by paying more than the minimum payment, you’ll accelerate how quickly you pay the loan off in full, which will help save you money over time.

And don’t forget that through August 31, 2022, the interest rate on federal student loans is 0%! This is a great opportunity for you to chip away at the principal of your loan and reduce the amount you’ll pay in interest in the long run—even if you can’t afford to pay it off in full. While President Biden has floated the possibility of granting student debt forgiveness, this isn’t guaranteed, and it remains unclear just how much of your debt will be erased, if any. So any payments you make now will give you big savings once the pause on federal student loan payments is lifted. 

Good luck!


If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Student Aid. “Interest Rates and Fees for Federal Student Loans.”

  2. Sallie Mae. “Pay Off Your Student Loan Faster.”

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